Janet Freilich vs. Ted Sichelman on Patent Searching

Since there is no easy way to index or search through most patents, it is exceedingly difficult (if not impossible) to know if one is infringing a patent. In some industries, firms simply ignore patents, because it is less expensive to pay damages ex post than to do patent clearance searches ex ante. Larger numbers of patents exacerbate this problem. Christina Mulligan and Timothy Lee provide an excellent description of the problem of patent clearance searches in their article on Scaling the Patent System. One sentence in particular drives the problem home: “In software, for example, patent clearance by all firms would require many times more hours of legal research than all patent lawyers in the United States can bill in a year.”

Sichelman is skeptical that the problem is so significant; here's part of his response:

In my view, Mulligan and Lee arrive at their conclusion through faulty assumptions about how patent searching and review works. First, they wrongly assume that “it takes a patent lawyer one hour to determine whether a given widget-related product infringes a given widget patent.” . . . Second, Mulligan and Lee wrongly assume that a given company must review every patent held by every company in its industry. . . . Third, each company holds many patents. Thus, once it’s determined that one of a given company’s patents need to be licensed, it’s not as important to carefully review [them] all . . . . Fourth, many patentholders rarely assert their patents. . . . [T]he 2008 Berkeley Patent Survey, which I conducted along with Stuart Graham, Robert Merges, and Pamela Samuelson, found that even among software startups, about 25% regularly review the patent literature, especially as part clearance searches prior to product development and launch—further justification for a somewhat high, but generally reasonable, per company annual search cost in the software industry.

I agree with [Sichelman] on many points, but I stand by my conclusion that clearance searches are very difficult, if not impossible. . . . He is correct that it will often only take a few minutes to determine whether or not a given patent is relevant, however, my sense is that the real problem is not only in reviewing the patents you find in the first search (which may get you 95% of the way to clearance), it’s in finding the last 5%. Those are the patents that use non-standard vocabulary or otherwise cover the product in unexpected ways. . . . The problem with patent searches is that if you miss even one patent that covers your product; you don’t have legal clearance to manufacture.

If any readers have stories that shed light on this debate, feel free to add them in the comments, or to send me an email (ouellette@law.stanford.edu).